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No tax or rate change in budget
June, 23rd 2009

The Delhi government, in its annual budget for 2009-10, effected only two tax changes and left utility user fees untouched for citizens of the national capital.

With Delhi hosting the Commonwealth Games in 2010 and the tourism sector showing a decline, the ruling Congress government reduced luxury tax on hotels by 2.5 percentage points, to 10 per cent. However value added tax (VAT) on tobacco and gutkha were increased to 20 per cent from the current level of 12.5 per cent.

The fiscal impact of these two changes was not provided. We support the action plan of the central government for stimulus to the economy. Keeping the current status of the economy, I am not making any major taxation proposals, said A K Walia, finance minister.

Even as tax collections during the last fiscal (2008-09) were lower than initial budget estimates because of the economic slowdown, this budget expects tax revenue to grow by 8.5 per cent in 2009-10. More important, the revenue surplus is projected to increase by nearly 50 per cent in the current fiscal as compared to the revised estimates of 2008-09

This is mainly on account of a 58 per cent projected increase in non-tax revenue to Rs 5,513 crore in 2009-10, as compared to Rs 3,492 crore in 2008-09. However, the desegregated numbers on non-tax revenue show a much lower amount of Rs 2,570 crore in 2009-10.

Achieving 9 per cent growth in revenue receipts is likely to be difficult, with only VAT and state excise showing positive growth in 2008-09. The impact of economic slowdown is noticeable more on stamps and registration fees, motor vehicles tax and luxury tax, which have registered negative growth in the year, Walia said.

On expenditure, the budget for 2009-10 retained the interim budget estimates. Total spending is estimated at Rs 23,043 crore, with plan expenditure of Rs 10,000 crore and non-plan component of Rs 12,932 crore.

About 70 per cent of the total expenditure will be met through the Delhi governments own revenue receipts, with central grants contributing 11 per cent and its share in central taxes at 2 per cent.

Of the revenue receipts, 62 per cent comes from VAT collections, 9 per cent from state excise and 7 per cent from stamp duty & registration fee.

With annual plan outlay of Rs 10,000 crore, the Delhi government will spend 31 per cent of this on transport.

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